Investors are criticising the Apple’s board for not providing enough detail regarding a CEO succession plan in the wake of Steve Jobs’ resignation from Apple, illuminating possible concerns about Jobs’ departure.
Tim Cook is now CEO of Apple and Steve Jobs its chairman, but several shareholders wonder why the company only yesterday indicated Cook would fill Jobs’ shoes, indicating the lack of openness around the succession plan was poor practice.
“From a corporate governance point of view, transparency is very important when you’re an investor,” said Jeffrey Cohn, a succession-planning consultant and author in New York. “Why didn’t the board just say that ‘Tim is our guy?'”
Cohn is not alone in his concerns, as investor advisory firm Institutional Shareholder Services in February called on Apple to make its succession plan public.
“All companies should have succession planning policies and succession plans in place, and boards should periodically review and update them,” the ISS said in a statement.
The ISS and Cohn’s frustration refer to Jobs’ central role in Apple, suggesting his absence may devalue the company’s shares. While the company’s stock last night did take a five per cent dip upon news of Jobs’ resignation, it rebounded as investors took comfort that in the short term at least, Apple looks set to continue as one of the world’s most valuable companies.
Responding to anxious shareholders, Apple spokeswoman Katie Cotton reiterated the board has had a succession plan for years but kept it under wraps to deflect competitors.
Other reasons the famously secret Apple may have declined to reveal its plan include the difficulty of balancing investors’ concerns with respect for the company’s ailing yet iconic CEO.
Perhaps with this understanding, a majority of shareholders in late February voted against the ISS’ recommendation to make Apple’s CEO transition plans public.
Regardless of investors’ worries and the board’s handling of Jobs’ transition, Cook has been in charge of daily operations during each of Jobs’ three medical leaves. Shareholders’ eyes are now turning to him, seeking answers about how he will run the company in its founder’s absence.
For the moment, though, Cook won’t be alone in his endeavour, as Jobs yesterday became Apple’s chairman. His role will likely be advisory in nature, rather than a direct involvement, though no one knows for sure which responsibilities the chairman role entails.
Stephen Davis, executive director of the Millstein centre for Corporate Governance and Performance at Yale School of Management, said Apple should clarify both Jobs’ health situation and his new role as chairman.
“Being a chairman is not just a name,” Davis said. “There are real responsibilities,” particularly at one of the most valuable companies in the U.S., based on market capitalisation.
While some shareholders continue to worry about the company’s future and entreat Apple to be less opaque about its management situation, others believe the tech giant is proceeding as best as it can.
Thomas Saporito, CEO of RHR International and CEO succession psychologist, said Apple must be “vigilant and on top of succession, but not disrupt the CEO who is in place,” he said. After all, Jobs “is the very soul of Apple.”